Korzeniowska and Korzeniowska

[2010] FamCA 100

FAMILY COURT OF AUSTRALIA

KORZENIOWSKA & KORZENIOWSKA [2010] FamCA 100

FAMILY LAW – PROPERTY – Superannuation – Adjustment of property interests – superannuation splitting order

Family Law Act 1975 (Cth): s 75(2), s 79(1), s 79(4), s 90ME, s 90MT(1)

Hickey & Hickey & Attorney-General for the Commonwealth (2003) FLC 92-144

APPLICANT: Mr Korzeniowska

RESPONDENT: Ms Korzeniowska

FILE NUMBER: CAC 921 of 2009

DATE DELIVERED: 11 February 2010

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Faulks DCJ

HEARING DATE: 17 November 2009

REPRESENTATION

THE APPLICANT: Self represented litigant

THE RESPONDENT: Self represented litigant

Orders

IT IS ORDERED THAT:

1. In accordance with s 90MT(1)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment within the meaning of s 90ME of the Family Law Act 1975 (Cth) becomes payable to or on behalf of the husband from his interest in the State Authorities Superannuation Scheme, the wife is entitled to be paid (by the Trustee of the State Authorities Superannuation Scheme) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth), using a base amount of $90,000 and there is a corresponding reduction in the entitlement of the husband would have had but for these Orders.

2. The operative time for Order 1 is twenty eight (28) business days after the service of the Final Orders on the Trustee of the State Authorities Superannuation Scheme.

3. Liberty is reserved to the said Trustee to apply to this Court about the Orders made or the form thereof within the period of twenty eight (28) days after service of a copy of these Orders on the Trustee.

4. The matters with respect to the property of the parties are otherwise removed from the pending cases inventory.

IT IS NOTED THAT:

1. The parties note that this Order, and payments made as a result, will be affected by the Superannuation Amendment (Family Law) Act 2004 (Cth) which came into effect on 18 May 2004 and the Family Law (Superannuation) Regulations 2001 (Cth) which together provide for a separate superannuation interest to be created for the non-member spouse and for consequential effects on payments.

2. The husband’s interest in the State Authorities Non-Contributory Scheme is unaffected by these Orders and will remain unsplit.

IT IS NOTED that publication of this judgment under the pseudonym Korzeniowska & Korzeniowska is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: CAC 921 of 2009

MR KORZENIOWSKA

Applicant

And

MS KORZENIOWSKA

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is a dispute which was transferred to this Court by the Federal Magistrates Court of Australia in August 2009.  Essentially, the matter relates to the division of the property of the parties.  The situation is complicated by the fact that the husband has been declared a bankrupt and there is at least the threat of bankruptcy hanging over the wife as a consequence of the financial involvements of the parties.

Background

1. In essence, the husband is a bankrupt apparently on the petition of the Australian and New Zealand Banking Group Limited (ANZ Bank) and St. George Bank Limited (St. George Bank).  These banks have either joint and several charges over property, or have joint and several loan agreements between the parties, and have apparently decided to pursue the wife for the whole amount owing, notwithstanding that apparently these banks have also been prepared to prove in the bankruptcy of the husband.

2. The Family Court has jurisdiction to make alterations to some of the priority for debts.[1]  However, no application has been made in this matter to join either bank and I do not propose to postpone the issues between the parties any further to enable that situation to occur.

   [1] Family Law Act 1975 (Cth) s 79(1)(b).

3. What I accept is the case is that the banks, whether as a matter of justice or not, intend to pursue the wife for the full amount owing, which I understand to be in the vicinity of $150,000.  I am informed and accept from the wife that she is negotiating with the banks.  It is possible that they will accept a sum, less than the full amount claimed, in satisfaction of the full debt and would not then proceed to make her a bankrupt.

4. This is something that she seeks to occur because it will enable her, at some point in the future she hopes to acquire her own house.  The wife believes bankruptcy would interfere, even if discharged, with her ability to achieve this goal.  I make no comment about that, but recognise that it is at least a possible consequence.

5. The amount involved could be as high as $75,000 or perhaps as low as some $30,000, within the sphere of negotiations.  Because of the husband’s bankruptcy and the resolution of that by the sale of the various pieces of real estate owned by the parties, the net effect is that there are no tangible assets apart from a car which is in the husband’s possession and which is worth, it is asserted, about $21,000.

6. The only other assets of the parties, as they appear to be, are two superannuation entitlements.  On the husband’s part, one entitlement is his interest in the State Authorities Superannuation Scheme (SASS), the gross value of the interest determined in accordance with the relevant provisions of the Family Law (Superannuation) Regulations 2001 (Cth) is $303,774.68. His other entitlement is to a “employer only” contribution fund with the State Authorities Non-Contributory Scheme (SANCS) which on a statement at 30 June 2008 was apparently worth about $32,383.54.

7. It is asserted by the husband that he has contributed to these funds, in the case of State Super for about 29 years, and that SANCS has been substantially co-existent with the SASS.  The husband asserts the parties co-habited for only about 12 years.  The wife, who on this matter I accept as being more accurate, says 13 years and I accept that 13 years is the appropriate time.

8. The husband argues that whatever may be the value of the superannuation, the wife should only receive a sum, or a split of that superannuation by reference to the years of co-habitation.  Interestingly, in this context the wife agrees that that is the appropriate split to occur. 

Relevant Law

1. The fact that each of the parties seeks something of that sort does not finalise the questions that are before me.  I am obliged to undertake a four step process in determining disputes between the parties, which is to:[2]

   a)Identify and value the property, assets, financial resources and liabilities of the parties;

   b)Identify relevant contributions and assess them;

   c)Consider relevant matters referred to in s 79(4)(d) to s 79(4)(g) of the Family Law Act 1975 (Cth); and

   d)Ensure my order adjusting the property, assets and liabilities of the parties is just and equitable.

   [2] See Hickey & Hickey & Attorney-General for the Commonwealth (2003) FLC 92-144, 78,386 (per Nicholson CJ, Ellis & O’Ryan JJ).

2. In this situation, the relevant considerations, other than the superannuation itself, are that the children of the parties live with the wife and she receives some assistance by way of child support from the husband.  I accept that in the past that has not been the case all together and into the future it is clear that the bulk of the caring of the children will remain the responsibility of the wife.

3. It is also the case that the husband is a bankrupt and that limits his ability to contribute to the children, in the immediate future at least.  So far as the wife is concerned, she is left with no assets at the end of the time that the parties were together and is without a vehicle which, indeed, is an advantage that the husband agrees he has as a consequence of the various financial activities that have occurred.

4. The prospect of the wife receiving superannuation does not necessarily resolve her difficulties with the bank.  For her to be able to have a fund to negotiate with the banks, she will have to persuade Trustee of SASS to release some part of the funds to which she would otherwise be entitled, to enable her to effectively produce the money that would provide the offer of payment to the banks to forestall and prevent her from being declared bankrupt.  That is a discretion which I am not asked to influence at this point, but only to provide the basis upon which such negotiations can occur.

5. Realistically, if I take account of the likely result of those negotiations, unless she were to receive funds through the superannuation split of about $75,000, there would be no guarantee that the amount that she could negotiate with the bank would be sufficient to prevent her from being declared a bankrupt, or from their, that is the banks, pursuing the rest of the funds that might be due from the joint and several loan.

6. Whether this would be fair or appropriate on the part of the bank is a matter that I cannot decide, except it seems to me to be – and I choose the word with some care – outrageous for a bank to accept liabilities from both parties and then to seek to pursue only one party, with the threat of declaring that party bankrupt because they have not proved, effectively, in the bankruptcy against the other party.  However, it is not my part to otherwise comment on that.

7. It seems to me to be appropriate that I should take account of the fact that some part of the superannuation was accrued prior to the time the parties lived together. It is also appropriate that I should take account of the fact that the wife, will have continued to contribute by way of her contributions as homemaker and parent in accordance with the provisions of s79(4)(c) of the Family Law Act 1975 (Cth), for a period of up to 12 years beyond the time of the parties’ separation. This is a factor which is going to affect the ultimate determination of this matter.

8. If I were to order a specific sum to be split from the husband’s superannuation entitlements at this point, he will not then thereafter have contributed further to the incretion of those funds. Therefore, I should properly take account of the fact that the wife’s contribution in relation to the children will continue and that the husband’s financial contributions to his superannuation will not.  Accordingly, simply to divide the superannuation on the basis of thirteen twenty-ninths (13/29ths) for the period of cohabitation would, in my opinion, be unreasonable and unjust.

9. I note that it is asserted by the husband that there was no “topping up” of his superannuation to provide for the parties’ future together on his retirement.  On the evidence in front of me, I am unable finally to resolve that issue, but it seems to me that to some extent it is irrelevant.  The contribution that was made during the period of cohabitation by the wife, in her capacity as homemaker and parent, is a reasonable example of the arrangement and agreement between the parties that the husband would pursue his career and that the wife would look after the children and provide the home and services associated with it.

10. In such circumstances, it seems to me there should be a proper recognition of each of those contributions and it would seem to me appropriate that I should make an order taking account of the financial circumstances of each of the parties, and of a division which will accord to the wife the sum of $90,000 from SASS of the husband that would provide enough benefit to enable her to negotiate with safety with the bank, and would, in my opinion, properly reflect the contributions of each of the parties and take account of the factors I have identified under s 75(2) of the Family Law Act 1975 (Cth).

Conclusion

1. In my opinion, the orders I propose to make are just and equitable given that the superannuation will undoubtedly accrue further funds over the years to come, and the benefit of $90,000 being available, but not necessarily available in whole to the wife, may provide her with some bargaining opportunities with the bank.  If the State Superannuation will not release the whole of that sum then they may release enough which would enable her to be effectively released from the bank’s clutches.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks.

Legal Associate: 

Date:  11 February 2010